Dow Jones Wilshire 5000SM Loses $6.9 Trillion in 2008 Worst Year Ever for Broad Market Index

16 January 2009

The Dow Jones Wilshire 5000 IndexSM, the broadest measure of the U.S. stock market, was down -37.23 percent in 2008 reflecting a $6.9 trillion decrease in overall market value, according to Wilshire Associates Incorporated, a global leader in investment services and consulting. This is the worst annual return for the DJ Wilshire 5000 surpassing the 1974 decline of -28.39 percent.

The U.S. stock market also suffered its worst quarterly loss since the fourth quarter of 1987 as the Dow Jones Wilshire 5000 posted a total return of -22.85 percent. The steepest losses were sustained early in the quarter with a –17.57 percent sell-off in October, the largest monthly decline since the crash of October 1987. Stocks ended the year on an up note, rallying 21.97 percent from their November 20, 2008 low to close the year -40.93 percent below the market high on October 9, 2007. Prior to the market’s end-of-year rally, the DJ Wilshire 5000 was down –51.57 percent from its October 2007 peak to the November 20, 2008 trough.

All size and style segments were battered during the fourth quarter each suffering total return declines in excess of -20 percent. While the small and micro cap segments experienced the largest quarterly retreats, with pullbacks of -27.01 percent for the DJ Wilshire Small Cap Index and -30.49 percent for the DJ Wilshire Micro Cap Index, smaller stocks led the late-year rally with the DJ Wilshire Small Cap Index rising 5.29 percent in December versus 1.32 percent for the DJ Wilshire Large Cap Index. For the year, large and small cap stocks had comparable losses; -37.06 percent and –37.76 percent, respectively.

The Basic Materials and Financials industries had the most disappointing performance in 2008, posting losses of -50.51 percent and -48.32 percent, respectively. Returns to Financials, in particular, reflected the housing and credit market turmoil that triggered the bear market of 2008. The Basic Materials group sold off in the second half of the year in sympathy with the collapse in commodity prices.

“Calendar year 2008 was a tale of two markets for commodities in general and oil specifically with steep advances in the first half of the year followed by cascading prices over the final six months,” commented Steven J. Foresti, managing director and head of the Investment Research Group of Wilshire Consulting. “The recent decline in oil prices and their subsequent impact on prices at the pump may be just what the U.S. and world consumer needs to buoy some of the recessionary pressures stemming from the current economic slowdown. At a daily consumption rate of 20 million barrels, the $100 drop in oil prices represents an approximate savings to the U.S. economy of $2 billion per day; or a staggering $700 plus billion annual savings -- a substantial stimulus package in its own right,” he added.

The DJ Wilshire Global ex-U.S. IndexSM posted a -22.54 percent return for the quarter despite bouncing back 5.90 percent in December. For the year, the non-U.S. equity market lagged U.S. stocks with the DJ Wilshire Global ex-U.S. Index down -46.11 percent compared to a -37.23 percent loss for the DJ Wilshire 5000. No region was immune from the global equity sell-off as each region outside the U.S. suffered a decline in excess of -40 percent.

All values are as of December 31, 2008. Index values are in price values. All returns are total returns and reflect float-adjusted market capitalization.

DOW JONES WILSHIRE SIZE INDEXES

The Dow Jones Wilshire U.S. Small-Cap Index posted a gain of 5.29 percent and the Dow Jones Wilshire Global Small-Cap Index rose 6.43 percent. The Dow Jones Wilshire U.S. Micro-Cap Index had an up month with a gain of 1.92 percent. The Dow Jones Wilshire U.S. Large-Cap Index was up 1.32 percent. On a global basis, the Dow Jones Wilshire Global Large-Cap Index gained 3.73 percent.

DOW JONES WILSHIRE GLOBAL REAL ESTATE INDEXES

In the United States, the Dow Jones Wilshire Real Estate Investment Trust (REIT) Index rose 17.70 percent and Dow Jones Wilshire Real Estate Securities Index (RESI) gained 17.55 percent. The Dow Jones Wilshire Global REIT Index, which represents 24 countries in Europe, the Americas, Asia/Pacific and Africa, posted a 10.83 percent gain. The broader Dow Jones Wilshire Global RESI was up 10.28 percent.

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